More freedom for Washington workers as noncompete contracts are challenged
Apr 24, 2024, 10:35 AM | Updated: 11:51 am
Michelle Gutierrez, organizer with Service Employees International Union joined with the Denver Post employee's during their rally with the community and other local unions for fair contract negotiations. (Photo By Joe Amon/The Denver Post via Getty Images)
(Photo By Joe Amon/The Denver Post via Getty Images)
In a groundbreaking move, the has swung its regulatory hammer, striking down nearly all non-compete agreements. But what does this seismic shift mean for Washington state workers? Let鈥檚 break it down.
The Ban and Its Implications
Non-compete clauses, those invisible shackles that bind employees to their current employers, have long been a contentious issue. Yesterday, the FTC took a bold step by banning these restrictive agreements. But before you breathe a sigh of relief, let鈥檚 delve into the specifics.
Who鈥檚 Affected?
If your employer ever slipped a into your employment contract, you鈥檙e not alone. These clauses typically prevent employees from taking similar jobs in the same field within a certain geographic area. But here鈥檚 the twist: the FTC鈥檚 ban applies nationwide, and Washington state is no exception.
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Washington鈥檚 Earnings Thresholds
Washington state has its own rules governing non-competes. Here鈥檚 the key: noncompete clauses cannot be enforced against individuals earning less than $120,000 annually. Yes, you read that right. If your paycheck鈥檚 lower than that, consider any noncompete clause about as binding as an oversized sweatshirt.
The Reality Check
Before you start drafting your resignation letter, let鈥檚 consult the data. According to census figures, the median income for single-person households in Washington was a modest $83,000 in 2023. For most workers, the FTC鈥檚 ban might not significantly change the game. The invisible ink of non-competes still binds you unless you鈥檙e among the fortunate high earners.
Legal Challenges Looming
The FTC鈥檚 ban, while a victory for employee rights, isn鈥檛 without controversy. Legal eagles are sharpening their quills, ready to spar in courtrooms. Challenges to the ban鈥檚 validity are expected, and the battle lines are drawn. Will the courts uphold this seismic shift, or will employers find loopholes to keep their non-competes intact?
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Washington鈥檚 Noncompete Law
Let鈥檚 dive into the nitty-gritty. Washington鈥檚 noncompete law lays out the ground rules:
- Disclosure: Employers must reveal noncompete terms in writing to prospective employees during the job offer. The employer must explicitly warn the employee if the agreement becomes enforceable later due to compensation changes.
- Earnings Threshold: Non-competes apply only if your annual earnings from the enforcing party exceed $100,000. Adjusted annually for inflation, this threshold ensures that high earners remain bound.
- Layoff Protection: If you鈥檙e laid off, enforcement of the noncompete must include compensation equivalent to your base salary during the enforcement period, minus earnings from subsequent employment.
- Duration Limits: Any noncompete lasting over eighteen months after termination is presumed unreasonable and unenforceable. Employers can rebut this presumption with clear evidence of necessity.
The Verdict
As the dust settles, Washington workers stand at a crossroads. The FTC鈥檚 ban is a beacon of hope if you are not an employer, but legal battles loom.
You can read more of Sam Campbell’s stories here. Follow Sam Campbell on or email him here.
Bill Kaczaraba is a content editor at MyNorthwest. You can read his stories here. Follow Bill on X, formerly known as Twitter, and email him here.听
